Marconi uncovers £126m black hole

DEBT-LADEN electronics group Marconi has a shortfall of £126m in its pension fund - around half its shrunken market value. The ailing telecoms equipment group calculated the deficit under new FRS17 accounting rules, which force companies to declare their pension liabilities in full in their annual accounts.

The company adopted the new standard ahead of most other groups. Under old accounting rules, the black hole would have been even bigger. Analysts said the move to FRS17 boosted its bottom line by around £50m. The Marconi pension schemes, with around 60% of their assets in bonds and cash, have 84,000 members, but only 15% of those are making contributions to the fund. The company pays in around £25m a year plus £16m to make up for past liabilities.

One pensions expert said: 'When the pension deficit is this large compared to the market value of a company, it is worrying both for scheme members and shareholders.'

A spokesman said the UK pension fund is 'virtually fully funded' and most of the deficit was on German and Italian pension schemes. Marconi refused to say whether it plans to shut down its final salary scheme.

Convalescent telecoms giant BT, which shut the doors of its final salary scheme to new members last year, owned up to a £1.8bn pension deficit, but said it was an improvement on the £4bn of red ink in September 2001. It paid £360m into the fund last year.